Wal-Mart Wants To Be Your Neighborhood Grocer

As Wal-Mart aggressively expanded in the grocery business, the retailing giant found that not all of its customers wanted to shop at a massive supercenter offering everything from clothing and electronics to produce and frozen foods.

Bigger wasn't always better, not when it came to shopping for food, so Wal-Mart adapted.

The smaller stand-alone grocers — called Walmart Neighborhood Markets — have been a success elsewhere in the country and are finally making their way to grocery-store rich Connecticut. The first in the Northeast opens Wednesday in West Hartford.

"A supercenter isn't always the right alternative, the best format or the right format in every circumstance," Wal-Mart spokesman Bill Wertz said. "A smaller store is easier to navigate. At times, customers were looking for a more convenient shopping experience. Sometimes that was more difficult in a supercenter."

Wal-Mart, already the largest grocer in the country, clearly has a keen interest in the sale of food. Grocery sales are now the biggest part of the retailer's business.

The neighborhood store began as an experiment in 1998 and has grown to 267 nationwide, according to the company's website. The neighborhood stores were first used to fill in markets between Walmart Supercenters — those Wal-Mart stores that include a full grocery store — but the strategy is different in the more densely populated Northeast. The stores give Wal-Mart the opportunity to open in areas where it wouldn't be possible to open a supercenter, either because land is scarce or there is local opposition, retailing experts say.

Inside, the neighborhood markets look similar to supercenter grocery aisles, using the same style signs. There are differences: greater use of the accent color green and the fact that the produce is stacked as it would be in traditional supermarkets, rather than in crates, as in a Walmart Supercenter.

If the neighborhood markets succeed, Wal-Mart could squeeze out regional grocery stores and hold off a challenge from rival Target, which also is adding groceries to most of its stores. At the same time, Wal-Mart hasn't shifted its attention from supercenters that combine general merchandise and groceries. The retailer will open four supercenters this year in Connecticut, including one in Bristol where it also plans a neighborhood market.

Retail experts said Wal-Mart typically looks to open neighborhood stores near supermarkets that have high sales volumes — with the strategy of attracting customers with its low-price strategy.

Bernard Sostick, an analyst at Gilford Securities Inc. in Melville, N.Y., who follows Wal-Mart, said the biggest growth in the grocery business comes from winning over customers from competitors.

"You divide the pie with another participant in the field, and the weaker ones tend to suffer," Sostick said.

Competitors in the Bishops Corner area have been preparing since Wal-Mart announced last year that it would open a neighborhood market in a long-vacant supermarket space in the Marshall's plaza.

Springfield-based Big Y Food Inc. has poured $1.7 million into renovations at its store diagonally across North Main Street from the new Wal-Mart store. The updates to the West Hartford store debuted last week.

Claire D'Amour-Daley, a Big Y spokeswoman, said the store, a former Waldbaum's Food Mart that Big Y bought in 2010, was targeted for renovations even before Wal-Mart planned the new store.

"I'd be lying to you if I said it wasn't part of the equation," D'Amour-Daley said. "We looked at that, and we knew what was happening in the marketplace there, and we definitely moved the West Hartford location up on the list."

In addition to Big Y, Bishops Corner has Whole Foods and Crown, a kosher market, both of which cater to specialized customers. While Sostick said such specialty markets are less likely to be targeted by Wal-Mart, Crown's owner said he isn't ignoring this week's opening.

"If you didn't take it seriously, you'd be foolish," said Marc Bokoff, who bought Crown in 2009. "They aren't opening a convenience store."

Bokoff said the store distinguishes itself with a full line of kosher products, including its deli and fresh meats. He said he plans to emphasize those offerings, its customer rewards program and its services: "They don't have a butcher with a knife. I have three — every day."

Bokoff called a meeting with his employees last week and made it clear that Crown wasn't going to lower prices across the board just to match Wal-Mart. Crown may look at the prices of key items including sugar and hummus, Bokoff said.